G-Sec turnover seen at Rs 10,00,000 cr this fiscal

New Delhi, Sept 20: The government securities market is expected to remain stable and post a record turnover of over Rs 10,00,000 crore this fiscal despite a turmoil in financial markets worldwide after terrorist attacks on US, the Primary Dealers’ Association of India (PDAI) said.

“Barring the possibilities of uncertainties and serious political instabilities, government securities (G-Secs) market is expected to be stable, albeit with usual hiccups, which are seen even during normal times,” PDAI chairman, RV Joshi, said.

Primary dealers in G-Sec market also panicked after the attacks on US, he said, but added “the proactive moves taken by the Reserve Bank of India (RBI) calmed the markets.”

Joshi, also the managing director of Securities Trading Corporation of India (STCI), was optimistic that G-Sec market is set to post over Rs 10,00,000 crore turnover this fiscal.

“What is seen in the G-Sec market is only the tip of the iceberg. If the whole of the last fiscal saw a total secondary market turnover of Rs 5,60,000 crore, this figure has already touched Rs 4,61,027 crore during the first five months in this financial year. It might cross Rs 10,00,000 crore during this fiscal,” he said.

The primary gilts market has also been buoyant with government borrowing crossing Rs 86,000 crore compared to Rs 70,000 crore during the same period last year, Joshi said.

“It has been rather unprecendented that gilts market has been buoyant for over eight months at a stretch. Triggered by reduction in bank rate from 8.0 to 7.0 per cent, cuts in CRR, together with substantial flow of liquidity, there has been good demand for G-Sec all along,” Joshi said.

The bullish trend in the G-Sec market was in anticipation of the interest rate cut, Joshi said pointing to “softer interest rate stance” of RBI and the successive rate cuts in US. “There are other factors such as obscure credit pick-up from banks, diversion of investments from co-operative banks and problems,” he said.

Problems with the Unit Trust of India have also been responsible for big and small institutions diverting funds to G-Secs, the PDAI chief said. “The Indian market has the potential and resilience to take this volume several times more in the coming few years with all the varieties of products of derivatives,” he said.

— PTI